Lain v. Allstate and the Line Between Scope and Coverage in Appraisal
Appraisal decides the amount of loss — not whether the loss is covered. Lain v. Allstate is the classic reminder of where that line sits.
Appraisal is a contractual mechanism written into almost every property policy. Either party — insured or insurer — can invoke it to resolve a disagreement about the amount of loss. What appraisal cannot do is decide coverage questions: whether the peril is covered, whether an exclusion applies, or whether the insured breached a condition.
The Fifth Circuit's decision in Lain v. Unum Life Insurance Co. of America, 279 F.3d 337 (5th Cir. 2002), and the long line of Texas 'appraisal is for amount, not coverage' cases that followed, all draw the same line: appraisers price the damage; courts decide whether the policy pays for it. When a carrier tries to send a pure coverage fight to appraisal — or when an insured tries to use appraisal to force a disputed coverage question — the panel is out of bounds.
The nuance is causation. Under State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009), causation questions tied to the extent of damage from a covered peril (how much of the roof is wind vs. wear) can fall within the appraisal panel's authority as part of 'amount of loss.' But pure causation — whether any covered peril occurred at all — is a coverage question, and stays with the court.
For a policyholder, this matters when the carrier tries to freeze a claim by demanding appraisal for a fight that is really about coverage. Knowing the line lets you push back — or invoke appraisal yourself when the fight is really about scope, not policy language.